As part of the sanctions imposed on Russia over its attack on Ukraine, reserves held by the Russian central bank with financial institutions in the United States were frozen.
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However, the US Treasury Department has so far allowed the Russian government to use these reserves to repay its dollar-denominated bonds. However, on Monday, when the Russian government was to pay over $ 600 million to bondholders, the US government decided to prevent Moscow from accessing the frozen reserves.
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According to a spokesman for the Ministry of Finance, the aim of this step is to force Moscow to make a difficult decision whether to use the dollars at its disposal to repay its bonds or for other purposes, including financing the war in Ukraine.
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“Russia has to choose between drawing on the remaining dollar reserves or new arrivals, or insolvency,” the spokesman said. According to a Reuters source, the Russian government has 30 days to make Monday’s payments before they are considered to be missed.
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